Emerging-market stocks and bonds have been outperforming their domestic counterparts for the last six months. These ETFs are an undervalued global investment opportunity.

NEW YORK (Fabian Capital Management) -- Emerging-market exchange-traded funds have been one area of the market on which I have been admittedly cautious about adding. Over the last several years they have consistently underperformed their U.S. and European counterparts as investors have adopted a home-country bias to their portfolios.

This is understandable considering the consistent string of positive economic statistics that have helped push the domestic markets to new all-time highs. At the same time, global conflicts, currency issues and fiscal instability have capped the upside of emerging-market countries since 2011.

Pockets of strength were readily apparent in limited areas such as India and Taiwan but, as a whole, this group has been mired in a fog of disenchantment with the global investment community.

My initial foray into emerging markets started early this year with a position in the iShares JPMorgan USD Emerging Markets Bond ETF (EMB). This ETF has over $5 billion committed to mostly sovereign debt of emerging-market countries such as Brazil, Turkey, Russia and Mexico. In the wake of the 2013 interest rate scare, EMB fell over 14% from its high and began to regain stability in the fourth quarter.

The attractive quality of emerging-market bonds became apparent when comparing the credit characteristics and relative valuation to domestic high yield fixed-income of similar duration. Since EMB crossed back above its 200-day moving average at the beginning of 2014, investors have continued to increase their exposure to this undervalued asset class. According to recent data, EMB has gained more than $1.4 billion in new assets and achieved a total return of 9.12% this year.

Emerging-market bonds have been one of the best performers in 2014 when compared to other fixed-income sectors such as treasuries, high yield, investment grade, mortgage, and municipal bonds. EMB has also continued to be extremely resilient in the face of some mild volatility in interest rates. Despite its run back to the highs, EMB is still sporting a strong 30-day SEC yield of 4.26% and dividends are paid monthly to shareholders.